9 ways to spot — and avoid — a shady student loan 'debt relief' agency
Most student loan debt relief agencies push consolidation as the single solution to any student loan debt issue. They conveniently neglect to inform a borrower that besides consolidating, there’s an abundant variety of repayment options that are readily available to them, even if they are a little past due on their federal student loan payments.
Obtaining more information about their repayment assistance possibilities is a matter of doing careful research and speaking with a trusted professional — one who has direct experience in the student loan industry.
Red flag No. 5 — they are pushy and use sales tactics.
Shady student loan debt relief customer service representatives are often pushy and in a rush to sell borrowers on consolidating their loans. They might even offer a “limited-time offer” in order to get borrowers to make an impulsive financial decision.
Keep in mind, the customer service agents at these companies are often well-trained sales representatives and have their bottom line, not a borrower’s financial benefit, in mind.
Red flag No. 6 — they are ambiguous and/or dishonest about their fees.
Many shady companies tell borrowers that the cost for their help will vary, depending on the level of legal work involved and the amount of the debt the borrower has. They may also claim that monthly fees are required, in addition to a lump sum that must be paid up front — all for a consolidation.
This is a big red flag that borrowers should steer clear of. Anytime an agency is dishonest or ambiguous about its “ongoing” fees is a big warning sign of that agency’s lack of integrity. (Source: http://www.nclc.org/issues/searching-for-relief.html )
Red flag No. 7 — they don’t educate borrowers on their options.
Unethical debt relief agency reps rarely take the time to educate a borrower on what consolidation really means, on the different types of consolidation and whether it’s really right for them at this time.
Consolidation has a number of benefits for the right candidate, but also a number of significant drawbacks for unideal candidates.
Red flag No. 8 — they hide behind a website.
Many borrowers are so desperate for assistance that they are willing to give their financial and personal data to a complete stranger on the telephone.
Most shady debt relief agencies hide their representatives' photos and direct phone numbers behind their websites for good reason. Instead of forming a person-to-person relationship with you, it benefits them to keep their anonymity behind red tape.
Red flag No. 9 — they have insufficient or no credentials.
Most borrowers do not think to ask a customer service representative for their credentials — and they really should.
Often, these reps are simply salesmen, not student loan experts. Sometimes, debt relief agencies will claim to have a financial planner or lawyer as their source of expertise, and/or a group of individuals who keep "up to date" on student loan matters.
In reality, the best candidate to guide you with your student loans is someone who has dealt with student loans directly and is completely open about professional background and experience.
Above all, the most important indicator borrowers have is their gut feeling. If any person a borrower speaks with does not take the time to help them feel at ease and more empowered about their financial decisions, he or she is not the ideal person to tackle any aspect of the borrower's student loan repayment.
Jan Miller is a student loan consultant and president of Miller Student Loan Consulting. He helps borrowers customize their repayment strategies to fit their budget, plans and life. EMAIL: firstname.lastname@example.org